rfTTEEEST BATES ON SHORT-TIME FARM LOANS. 11 



farmers have formed temporary agreements under which they act 

 collectively as guarantee associations for approved loans of members. 

 The added security from these associations has enabled members to 

 obtain loans at reduced rates of interest. Another plan, illustrated 

 by what has been done in a Texas community, involves a temporary 

 agreement between a group of farmers and a bank, but differs from 

 the plan previously mentioned in that the added security consists of 

 a reserve fund left with the banker. Each borrower allows the bank 

 to retain 5 per cent of his loan for a reserve fund, which is held as a 

 guarantee for all the loans made under the agreement and is returned 

 to the farmers at the termination of the agreement. 



Under another plan, which has been employed in several communi- 

 ties of the Northwest, a group of business men agree to deposit a sum 

 of money with a bank and guarantee the loans given to farmers for 

 some specific and approved purpose. In all such cases farmers have 

 been enabled to obtain credit on more favorable terms than usual. 



HOW THE COOPERATIVE CREDIT ASSOCIATION HELPS MEMBERS TO OBTAIN LOANS 



ON BETTER TERMS. 



In a number of locaHties in this country, groups of farmers have 

 organized cooperative credit associations or credit unions. Usually 

 each credit union makes definite arrangements with some bank by 

 which the latter acts as a depositary and furnishes loans on specified 

 terms. Thus one of the unions in North Carohna receives 3 per cent 

 interest from its bank on deposits subject to check and 4 per cent on 

 savings accounts left on deposit three months or longer, and pays 5 

 per cent interest on its loans from the bank. The credit union in 

 turn pays its own members 4 per cent on their savings accounts and 

 furnishes them loans at 6 per cent. Such a credit union not only 

 accustoms its members to the use of check and savings accounts but 

 also enables the members to obtain loans for approved productive 

 purposes on better terms than they could obtain elsewhere. 



ATTITUDE OF THE LOAN AGENCY TOWARD THE FARM-LOAN BUSINESS. 



In many regions the banks are not accustomed to dealing with 

 farmers to any extent, especially with tenants and croppers, and the 

 latter, therefore, must obtain their loans from other sources. This is 

 especially true in the cotton States, where the system of advances 

 from merchants to farmers still prevails. A few banks are breaking 

 away from this traditional attitude, however. In one community 

 of South Carolina the banks are actively soliciting business with 

 croppers and renters as well as with farm owners. One of these banks 

 began this policy 15 years ago on the assumption that many small 

 accounts of this character properly scattered would be safer for the 

 bank than a few large accounts. The experiouco of these banks has 

 led them to become more active than cvcjr in the extension of their 



